A common complaint
about public school funding is that large financial gaps exist between school
districts. These charges are partly rooted in historical fact: For most of the
20th century, the majority of America’s school revenues came from local property
taxes. In many states, including Michigan, large disparities between districts’
local property values and methods of assessing taxes led to substantial funding
variations between urban, rural and suburban districts. With the growth of the
suburbs, particularly in the latter half of the century, suburban districts
could often raise more local revenue per pupil than rural and urban districts.

The view that large disparities exist between urban,
rural and suburban school districts was most notably popularized by the work of
author Jonathon Kozol, who primarily blamed a lack of resources for the
struggles of urban schools. In his book “Savage Inequalities: Children in
America’s Schools,” Kozol argues that unfair tax distribution systems led to
enormous educational inequalities between urban and suburban districts.[1]His work has been required reading
in education and social science schools in American universities for years, and
it is heavily cited in popular literature.[2]

Even before Kozol’s book was published, many state
governments had begun a process of centralizing school funding by increasing
the use of state taxes in financing public schools. This increased reliance on
state taxes provided a means for reducing the school district funding
disparities that had arisen because of differences in districts’ ability to
generate local property tax revenues.[3] Michigan’s Proposal A,
passed by the state’s voters in 1994, was a notable example of the shift toward
increased state funding and equalization of school district revenues.

Additionally, the federal government’s role in funding
local school districts has grown dramatically over the past two decades.
Federal revenue per student more than doubled in inflation-adjusted terms from
1988 to 2007.[4] A significant component of
this federal money involves supplemental funding for children from low-income
families, and this funding has tended to direct additional revenue to
inner-city and rural school districts.

The following report compares the revenue streams and
spending patterns of urban, suburban, town and rural school districts in
Michigan. The analysis is meant to provide context for public education
spending discussions; it is not meant to provide answers about the “correct”
levels of spending and revenue.

The findings should be of interest to school officials,
education researchers, education reporters and state residents monitoring the
funding of the state’s public education system. The results should also provide
a helpful perspective to state officials whenever they discuss changes to
Michigan’s school funding model or to regulations of school district
expenditures.